South West businesses must do more to take advantage of the government’s R&D incentives or risk being left behind in the ‘innovation race’, according to tax experts at KPMG.
The warning comes as HMRC publishes its latest statistics on claims for R&D incentives by businesses, which are designed to encourage investment in innovation through cash credits or by reducing a company’s tax bill.
Across the UK, there were 26,070 total claims made for R&D incentives in accounting period 2016/2017, an increase of 19% from the previous year, with £2.85 billion of government support claimed.
However, in the South West the figures show that there were only 2,040 claims made by businesses in the region for R&D tax relief during 2016/2017, representing just 8% of the national figure.
Iain Butler, Leader of KPMG’s innovation, reliefs and incentives team in the region, said: “R&D incentives are an important tool in fostering innovation within the economy and a flagship policy for the Government.
“Whilst the figures show that there are significant and valuable benefits being claimed, businesses in the South West are clearly lagging behind in claiming these reliefs and risk missing out on a great opportunity to invest in their own development.
“The advantage of R&D incentives is that they are designed to benefit all businesses, regardless of industry, and the criteria apply to more activities than many people realise. Quite simply, you don’t have to be wearing a lab coat to qualify. Businesses really need to step up and realise the benefits of these incentives or risk being left behind in the race to innovate and compete at home and abroad.”
Across the country, manufacturing continues to lead the way with 7,210 claims during the period, valued at £860 million, followed by the information and communication sector with 6,650 claims (£550 million) and professional, scientific and technical sector with 5,135 claims (£635 million).